Big bank mergers in Europe face obstacles, but they would be a good idea

Big bank mergers in Europe are a distant prospect, but that doesn’t mean they’re not a good idea. There are no true Europe-wide players and that is likely hurting efforts to develop European capital markets. At the very least it helps U.S. banks conquer a divided industry.

There has been excitement recently around potential cross-border combinations of UniCredit and Société Générale, for example, or BNP Paribas and Commerzbank. Such deals aren’t happening in the near term. Many big European banks are still restructuring and...